After obtaining an understanding of internal control and arriving at a preliminary assessed level of control risk,an auditor decided to perform tests of controls.The auditor most likely decided that:
A)Additional evidence to support a reduction in the assessed level of control risk is not available.
B)An increase in the assessed level of control risk is justified for certain financial statement assertions.
C)It would be efficient to perform tests of controls that would result in a reduction in planned substantive procedures.
D)There were many internal control deficiencies that would allow misstatements to enter the accounting system.

Question

Quizplus · Accepted Answer

If the preliminary assessed level of control risk is high, performing tests of controls is an efficient way to gather evidence to support a reduction in control risk. This, in turn, would result in a reduction in the planned substantive procedures, which would save time and resources. Therefore, the auditor most likely decided that it would be efficient to perform tests of controls that would result in a reduction in planned substantive procedures. Option A is incorrect because additional evidence may be obtained through tests of controls. Option B is incorrect because an increase in the assessed level of control risk is not the goal of tests of controls. Option D is incorrect because the presence of internal control deficiencies does not necessarily mean that misstatements would be allowed to enter the accounting system.

After Obtaining an Understanding of Internal Control and Arriving at a Preliminary